Health Insurance Needs to Grow Up

I've been covered by private insurance my entire life.  Even more telling, I worked in the health insurance industry for -- gasp! -- some thirty years.  It's not just paid for my healthcare, it's financed my life.

Today, though, for the first time in my life, I'm covered by public insurance -- and I couldn't be more relieved.

Credit: WorkLife Partnership

Now, I'm not going to go all Wendell Potter.  I know many people have their health insurance horror stories, but, sadly, people have them about pretty much every part of the healthcare industry.  I believe most people working in health insurance, like most people working in healthcare generally,  sympathize with the people they serve and are just trying to do a good job.

The problem is that the health insurance model has outgrown the times.  I'll try to explain some ways how.

Premiums
Once upon a time, most people had employer coverage, and those employers paid all or most of its cost.  Those days are gone.  Employer coverage is still the predominant form of private health insurance, and employers still pay the majority of its cost, but percentage of people with employer coverage continues to drop and the amount they pay for it continues to increase.

Kaiser Family Health's 2019 Employer Health Benefits survey found that annual premiums for family coverage topped $20,000, with employees paying $6,000.  The average income for workers is $48,000.  Those premiums are awfully daunting -- yet people in the individual market would long for those numbers.

The fact is, premiums have become unaffordable for most Americans.  If you have a marketplace plan you might quality for a premium subsidy, and if you have employer coverage your employer might vary contributions by salary, but there's few of us who don't take a gulp at every premium payment, especially given the prospect that they're only going to keep going up.

Our scattershot, segmented, and inequitable mechanism for financing health insurance is no longer sustainable.  We need a more universal financing mechanism -- such as taxes -- that is based on wealth/income/ability to pay.  

Cost-Sharing
Once upon a time, point-of-care cost-sharing was minimal.  Those days are also gone.   Deductibles, copayments, and coinsurance have soared, even though ACA sought to at least place limits on the resulting out-of-pocket expenses.  Cost-sharing was originally intended to help deter unnecessary care, but have become more of a way to shift costs to consumers.

Credit: eHealth

As a result, nearly one-in-four report skipping medical care due to cost, with some estimates even higher (Gallop, 33%; HealthPocket 51%).  Again, ACA tried to mitigate this by mandating no cost-sharing for preventive care, but when, for example, 25% of diabetes can't afford their insulin, it's evident that cost-sharing has become punitive.

Some types and levels of cost-sharing may be appropriate, but it needs to be highly targeted and affordable.  Our current shotgun approach to it is harming more than it helps.  

Networks

There are too many stories of people getting astronomical out-of-network bills, often for healthcare professionals they didn't choose and may not have even known about.  Plus, your favorite in-network doctor or hospital may suddenly drop out -- or be dropped.  The same can happen with your prescription drugs.

It is true that networks do offer substantial "savings" from non-discounted charges, but that reflects more how outlandish the latter usually are.  Networks purport to be chosen at least in part on "quality," but measurement and demonstration of that remains elusive.  They represent a failure of the market, not a sign of its value.

We should all want patients to use the best possible healthcare professionals for their needs.  We should expect that the cost of those professionals should be directly related to the outcomes they deliver to their patients, and known in advance.  But, instead, we have networks that drive volume to those professionals and organizations who happen to contracted with our health insurer.  That's not a recipe for our best health.

Can we focus on getting patients to the right professional at the right time and place, for the right price?

Scope of services
When I said I now had public insurance, I overstated the case.  I have Medicare Parts A and B, but my Part D coverage is delivered by a private insurer, although largely funded by public dollars.  Like most on Medicare, I also have a Medicare Supplement, delivered by a private insurer.  And I still have private dental and vision insurance, not to mention auto, homeowners, and long-term care insurances that each also cover some health expenses.

Thought experiment: you're driving while talking to your boss on the phone, get distracted and smash into a tree on someone's lot.  Fortunately, your most serious injury are a broken jaw and some broken teeth.  The question is: who pays?  Your health insurance?  Your dental insurance?  Workers compensation?  Your auto policy?  The homeowners policy?  Why is my mouth -- and, for that matter, my eyes and eyes -- almost always treated differently when it comes to insurance?

The answer to the thought experiment -- and I honestly do not know what it is -- will dictate which healthcare professional you see, how much they can charge you, and how much of that you have to pay.  That is, in a word, crazy.

And it is not just insurance, it also goes to how we educate and license healthcare professionals.  It's what I called the Animal Farm of healthcare: all services are equal, but some are more equal than others.

We need to step back and develop a comprehensive view of what is necessary for our health, how we assure we get it, and how we finance it.  

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I'm glad I no longer have employer coverage, where the employer chooses my network, level of care, cost, and even covered services -- and which I lose if I lose or change my job.  I'm glad I no longer have marketplace coverage, where the insurer can just drop out of the market.  Still, though, I regard Medicare as pretty clunky -- a 1960's (BCBS) design spiffed up with more modern touches like prescription drugs and preventive care, financed and delivered in a variety of ways.  It is not what one would design if starting from scratch.

So let's do that: for private insurance and for public insurance: let's rethink from basic principles and agreed-upon goals.  Let's design a health financing and delivery system for the 21st century.

We can certainly do better, if only because we could hardly do worse.